I could never see property dropping that much. 10, 20% MAX. But really, that big a drop would be devastating to our economy. Besides, no one would sell their property at those kind of losses voluntarily. It would mean interest rates went through the roof making their existing mortgages unaffordable. Selling at a loss in that situation to end up in financial ruin - I would not wish upon anyone.
Keep in mind interest rates (fingers crossed) have begun a downward cycle, which usually means property could actually go up
I think now is actually a good time to buy. Nothing is selling anyway because people just cant afford what is out there, making any serious sellers fairly negotiable. If interest rates do go down it will become a sellers market again - that is what increases prices.
That is all probably wishful thinking though!
Even if prices did temporarily drop by 40%, the only houses that would be for sale would be the odd ones that have been owned since well before the property boom early this decade - of which the owners just decide they no longer want. There would not be enough for the demand, which would in turn, send prices up again.
House prices are also always going to be relative to the price of building new. Again, building materials and wages of builders cant just drop without again creating devastating effects on the economy.